Wafi Programme

Wafi Programme

The Wafi programme regulates the sale and lease of off-plan real estate units in Saudi Arabia. Supervised by the Ministry of Municipalities and Housing with regulatory transfer to REGA, Wafi ensures transparency through mandatory escrow accounts, developer qualification requirements, and buyer protection mechanisms. As of September 2025, 434 licensed projects operate with 350 qualified developers. Buyer protections include: escrow accounts for all payments, 5% maximum reservation deposits, 7% annual compensation for late delivery, and structural warranties up to 10 years. Field inspections (1,130 in 2023, +28% YoY) and enhanced enforcement have reduced fraud rates by 68%. See FAL Licensing and NHC Communities.

Definition and Core Function

Wafi (Arabic for “reliable” or “trustworthy”) is a regulatory framework that governs the sale and lease of off-plan real estate units — properties transacted before or during construction. The programme operates through four primary mechanisms: mandatory escrow accounts that protect buyer funds, a developer qualification process that screens for financial and technical capability, enforcement through field inspections and penalties, and buyer protection provisions including late delivery compensation and structural warranties. Together, these mechanisms create the trust infrastructure necessary for a functioning off-plan market where buyers commit substantial funds to properties that do not yet physically exist. Without Wafi, the Vision 2030 Housing Program’s reliance on off-plan sales — which enable pre-construction revenue for developers and early price access for buyers — would be undermined by the lack of buyer confidence.

Purpose and Establishment

The Wafi programme was established by the Ministry of Housing — now the Ministry of Municipalities and Housing — to regulate the sale or lease of off-plan real estate units, meaning properties sold before or during construction. The programme’s fundamental purpose is ensuring transparency and protecting the rights of all participants in the off-plan market: developers, buyers, investors, and regulators. Before Wafi, off-plan transactions carried significant risks for buyers, including project abandonment, specification changes, and delayed delivery without recourse.

Off-plan sales are central to Saudi Arabia’s housing strategy. Approximately 26,000 housing units were launched under off-plan sales projects through the Sakani platform during H1 2025 alone. NHC commands 62 percent off-plan market share across its 25 urban destinations in 17 cities. Without a robust regulatory framework governing these transactions, the government’s ability to deliver on its Vision 2030 housing targets would be fundamentally undermined by buyer distrust and market dysfunction.

The regulatory authority over Wafi is being transferred from the Ministry of Municipalities and Housing to REGA, the Real Estate General Authority. This transfer consolidates real estate regulation under a single specialised body — the same institution that manages the Ejar rental platform, issues FAL brokerage licences, and will oversee the foreign ownership framework.

Escrow Account System

The escrow account requirement represents Wafi’s most consequential buyer protection mechanism. All purchase amounts must be deposited into dedicated escrow accounts established for each project. These accounts are managed according to completion milestones and a defined payment schedule, meaning that developers cannot access buyer funds until specific construction benchmarks have been verified.

Each project must maintain an escrow account with a unified number that is referenced in every sale contract with beneficiaries. This creates a transparent financial audit trail linking buyer payments to specific project accounts. The developer is explicitly prohibited from receiving any amounts directly from depositors — all funds must flow through the escrow account. This prohibition eliminates the historical practice of developers diverting buyer payments to other projects or personal use.

Developers are further restricted from depending exclusively on beneficiary funds to complete projects. The Wafi Committee specifies the percentage of construction work that must be completed before disbursement from escrow is permitted. This self-funding requirement ensures that developers have genuine financial commitment to project completion, rather than operating as intermediaries who collect buyer money and use it as their primary construction capital.

The maximum reservation deposit is capped at 5 percent of the value of each real estate unit. All reservation amounts must be deposited into the designated escrow account. This cap protects buyers from excessive upfront financial exposure to projects that may not be completed as specified. In markets without such caps, developers sometimes collect large deposits that become difficult to recover if the project fails.

Developer Qualification Process

Entry to the Wafi programme requires a formal qualification process. Developers must obtain a qualification certificate from the Wafi Committee prior to registration on Etmam, the Real Estate Developer Registry. Applications are considered within 10 days of completion, providing a defined timeline for developer entry. The qualification process evaluates financial capacity, technical capability, and track record.

As of 2023, 350 real estate developers were qualified under the Wafi programme. The Developer Support Program has expanded this pool, qualifying 70 new real estate developers and raising the total of certified developers to 310 under that specific programme. Small and medium project licences increased by 63 percent, indicating that the regulatory framework is accessible to developers beyond the largest corporate players.

This developer qualification system creates a two-tier market: qualified developers who can sell off-plan with Wafi protections, and unqualified entities who cannot. For buyers, particularly Sakani beneficiaries making what may be the largest financial commitment of their lives, the qualification stamp provides meaningful assurance that the developer has been vetted by a government institution.

The Ministry has also signed strategic partnerships with 36 international developers across 7 countries for expertise and knowledge exchange. These international partnerships operate alongside domestic Wafi-qualified developers, expanding the construction capacity and design expertise available to the Saudi housing market. Notably, agreements were signed with Chinese developers for the construction of 100,000 homes in 2026, representing one of the largest international housing construction commitments in the Kingdom’s history.

Buyer Protection Mechanisms

Beyond escrow accounts and developer qualification, Wafi provides several layers of buyer protection that address the most common risks in off-plan transactions.

Late delivery compensation. If a developer fails to deliver on time, 7 percent annual compensation is imposed in favour of the buyer. This financial penalty creates a direct incentive for developers to meet stated delivery timelines and provides buyers with meaningful compensation for delays that often create cascading financial consequences — including extended rental payments and disrupted family planning.

Structural warranties. Developers must provide warranties for structural and mechanical works lasting up to 10 years. This warranty period extends well beyond initial occupancy, covering defects that may not become apparent until years after delivery. The warranty obligation ensures that developers cannot simply hand over keys and walk away — they retain accountability for construction quality throughout the warranty period.

Enhanced enforcement. Since 2022, enhanced enforcement decreased the rate of fraud and non-delivery by 68 percent. This improvement reflects both increased inspection activity and more meaningful penalties for violations. The 1,130 field inspections conducted in 2023, representing a 28 percent increase from the previous year, demonstrate REGA’s investment in active compliance monitoring rather than passive complaint-driven oversight.

Exhibition licencing. The programme also regulates off-plan marketing through exhibition licences. In 2023, 35 licences were issued for showcasing 42,180 units under construction. This prevents unauthorised marketing of off-plan projects and ensures that all publicly promoted developments have passed through the Wafi qualification process.

Licence Categories and Scope

Wafi covers a broad range of off-plan real estate activities through distinct licence categories. These include licences for sale and rental of off-plan units, marketing off-plan foreign real estate, selling off-plan raw land, marketing domestic off-plan real estate, and showcasing off-plan units at international exhibitions. Each licence category has specific requirements and conditions.

The breadth of licence categories reflects the complexity of the modern Saudi real estate market. Off-plan transactions extend beyond simple residential unit sales to include raw land for future development, commercial properties, and international marketing activities. By bringing all of these activities under the Wafi umbrella, REGA ensures consistent regulatory standards across the entire off-plan spectrum.

The off-plan project licensing process itself requires a feasibility study that includes financial, construction, and marketing data, expected expenses, a unit delivery schedule, and expected funding sources. This requirement forces developers to demonstrate project viability before receiving authorisation to collect buyer funds — a critical gate in preventing speculative projects that lack the financial foundations for completion.

Wafi and the Sakani Ecosystem

The Wafi programme operates in close coordination with the Sakani subsidy platform. NHC units are offered directly through Sakani, and the off-plan protections that Wafi provides are essential for maintaining buyer confidence in subsidised housing transactions. When a Sakani beneficiary purchases an off-plan unit through REDF financing with a Dhamanat-guaranteed 5 percent down payment, the Wafi framework ensures that their financial exposure is protected through escrow management, delivery guarantees, and structural warranties.

During H1 2025, over 54,000 Saudi families benefited from housing support programmes, with over 48,000 families moving into their homes. Many of these transactions involved off-plan purchases that had been protected through the Wafi framework during the construction period. The programme’s effectiveness is thus measured not only by enforcement statistics but by the volume of successful off-plan transactions that result in families occupying quality homes on schedule.

The Council of Ministers approved five regulatory amendments to Housing Support Regulations that expanded the beneficiary pool, enhanced eligibility criteria, and increased product distribution flexibility. These amendments affect the Wafi framework by expanding the universe of subsidised buyers participating in off-plan transactions, increasing the volume of Wafi-regulated activity.

Market Impact and Scale

The scale of Wafi-regulated activity is substantial. Over 101,942 housing units were authorised across 434 licensed projects as of 2023. With NHC targeting 300,000 units by end 2025 and 600,000 by 2030, and 119 projects under construction providing more than 155,000 units, the volume of off-plan transactions flowing through the Wafi framework will continue to grow.

The Saudi residential construction market was valued at USD 19.59 billion in 2025, projected to reach USD 25.21 billion by 2030 at a 5.17 percent CAGR. Construction industry growth of 5.2 percent average annually from 2025 to 2028 will generate proportional growth in Wafi-regulated off-plan activity.

Riyadh’s market experienced a recalibration in H1 2025, with transaction volumes falling 31 percent year-on-year. This recalibration underscores the importance of Wafi protections: in a market where transactions are declining, buyers need additional confidence that their off-plan purchases will be protected. The escrow system ensures that even if market conditions shift, buyer funds are not at risk of developer misappropriation.

Challenges and Ongoing Development

The Wafi programme faces several ongoing challenges. First, enforcement capacity must scale with market growth. As the number of licensed projects increases, the inspection regime must expand proportionally to maintain compliance standards. The 28 percent increase in field inspections in 2023 represents a step in the right direction, but sustained growth in regulatory capacity will be necessary.

Second, the transition of regulatory authority from the Ministry to REGA must be managed carefully to avoid administrative disruption. During transition periods, regulatory overlaps or gaps can create uncertainty for both developers and buyers. Clear communication about which body has enforcement authority at any given time is essential.

Third, the programme must adapt to emerging transaction types, particularly digital fractional ownership, which REGA has explicitly designated as an official investment category under the foreign ownership framework. Fractional ownership of off-plan units introduces new complexity around escrow management, developer obligations, and buyer protections that the existing Wafi framework may need to address.

Despite these challenges, the Wafi programme has demonstrably improved the integrity of Saudi Arabia’s off-plan real estate market. The 68 percent reduction in fraud and non-delivery rates, combined with the institutional infrastructure of escrow accounts, developer qualification, and enforcement mechanisms, provides the foundation of trust necessary for the Kingdom’s ambitious housing delivery programme.

The programme’s continued evolution will be shaped by the growth trajectory of the Saudi real estate market, which is forecasted to expand from USD 75 billion in 2025 to nearly USD 110 billion by 2030. With NHC targeting 600,000 units by 2030 and ROSHN pursuing a 400,000-unit mandate, the volume of off-plan transactions flowing through the Wafi framework will grow proportionally, demanding continued expansion of enforcement capacity and regulatory sophistication.

For detailed analysis, see Wafi Program Entity Profile, FAL Brokerage Licensing, NHC Communities, Sakani Platform, and Housing Supply Dashboard.